South Africa: Why Splitting Eskom Into Three Separate Entities Is a Terrible Idea


In South Africa, with very rapid growth in renewables, one thing we do not need is an unreliable transmission network. If we do not focus closely on where new power sources are going to appear, plan ahead for expanding the network and ensure that new capacity fits in, we will see the sort of problems that were experienced by the UK rail network and the Australian power grid.

Whether or not André de Ruyter is right about Eskom corruption, the State Capture report confirms the general problem, as do numerous other instances of failing state-owned enterprises and branches of government.

What I want to focus on here is the plan to split Eskom into separate companies handling distribution, transmission and generation. De Ruyter offered this idea to the government before being offered the CEO job and it had been floating around before his time. This is one plan that he backed that is still on the agenda, and it's an awful idea.

First, terminology. Transmission is long-range power transmission over very high-voltage lines -- up to hundreds of thousands of volts -- which is more efficient than lower voltage. Distribution is closer to home, where the voltage starts getting stepped down until it is in the range of 220-240V.

In Eskom's last annual report, the breakdown of maintenance costs is R13.4-billion for generation, R0.8-billion for transmission and R3.6-billion for distribution.

Long-range high-voltage lines are generally pretty reliable and do not need a lot of maintenance, as these numbers show: it amounts to less than 5% of Eskom's 2021-2022 maintenance budget. Distribution is about 20% of the maintenance...

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